Oakway owners reinvent a community landmark.

Byline: SUSAN PALMER The Register-Guard

LINDA McKAY KORTH likes to tell this story on her son Steve: When he was in high school, she took him aside and said, "I'm not going to be like a lot of parents who start their kids at the bottom of the family business. You're going to start at the top."

Then she took him to the roof of the Oakway Center and handed him a broom. He spent his summer doing maintenance on the 22 buildings that occupied the 25 acres bounded by Coburg and Oakway roads and Oakmont Way.

Steve Korth, now 31 and a partner in McKay Investment Co., laughs even though he's heard this story plenty over the years. The truth is, the McKay tribe has a history of involving the kids early.

Back when McKay Korth was a grade schooler, her father, Miles McKay, owned a grocery store in Marcola, and she helped out peeling onions and sorting pop bottles.

When her father branched out from his grocery store enterprise to form McKay Investment Co., the partners in the fledgling firm were the family members: McKay Korth, her mother and her older brother, Doug. At 13, her job was keeping the books.

That was in 1953, and the family began by dabbling in fixer-uppers and small businesses, such as Billy's Grocery, a shop with two apartments above it at Seventh Avenue and Pearl Street.

Almost 50 years later, the family is best known for transforming the lackluster Oakway Center from a piecemeal collection of mom-and-pop mall shops and medical buildings to a high-end office complex and shopping center that lures shoppers with a complimentary combination of local and national outlets.

Nestled beside Borders Books and Music is Expectations, a local maternity shop. Tucked behind Starbucks is Mucho Gusto, a local Mexican restaurant.

While the changes haven't come without controversy - some local firms such as a dry cleaner and carwash were pushed out of the Oakway Center because they didn't fit the new image - the family has generally received high marks from the business community for its efforts.

The McKay Korth family gives developers a good name, said John Brown, a local real estate consultant and appraiser.

"Oakway is a classic example of how to do redevelopment. It's putting the land to a higher and better use than it was, and they did it without incentives. They didn't ask the community to help pay for it directly or indirectly," Brown said. In other words, no special tax breaks or federal grants.

The mix of stores includes Bed Bath and Beyond, Trader Joe's and Pier 1 Imports, all additions in the past five years that together with other businesses in the area approach the "nodal development" concept that city of Eugene planners tout as the preferred wave of the future.

"They've created that perfect little island out there that hasn't been replicated in the community. The only thing they don't have is multifamily development," Brown said.

The family started down the development road in 1956 when they bought their first significant bare-ground purchase, about 10 acres east of Coburg Road where a Goodwill secondhand store is now located.

McKay Korth and her brother, Doug, were in the thick of things, helping clear the land where a grocery store and pharmacy would be built.

As the years passed, the family added property to its holdings, always guided by Miles McKay, who had a knack for selecting land.

"He could see where the growth was going to occur," McKay Korth said. He snapped up property along Mohawk Boulevard before others recognized its potential.

Redeveloping the mall

It was also in the early '60s that the McKays gained control of the 25-acre triangle that became the Oakway Center.

That once-pastoral area was actually already in the family. McKay Korth's grandfather, Hiram McKay, had married its owner, Lillian Hayes. The land included a small peach orchard as well as pasture for sheep and cattle, a barn and stately oak trees.

The ambitious family built a small mall there, anchored by a department store, a grocery store and a drugstore, then slowly added offices for doctors and dentists on the periphery of the property.

The '60s and '70s represented a time of growth for the family firm, with Miles and Doug McKay doing the bulk of the work, while Linda McKay Korth focused on raising three children.

In the '80s, with her children well on their way, McKay Korth got more involved in the family business again. When her father died in 1989, she and her brother managed the family's roster of properties, which now included strip malls in Springfield and West Eugene.

Her son, Steve Korth, the youngest of her three, didn't get involved in the family business until 1992, after Doug McKay took over management of one of the family's other investments, a wood products mill in Drain.

Korth always figured he'd join the family business and had graduated from the University of Oregon with a degree in business management.

But he and his wife thought they'd take a year away from the Eugene area to play a little first and headed to Maui, where she worked as a waitress and he taught scuba lessons.

"Then I got a call from Mom, asking if I'd come back early. She said, 'I could sure use your help.' '

Doug McKay said his move to the mill was partly motivated by his own interest, but also because he wanted to make way for the next generation. He recalled the length of time it took for people to gain confidence in his management skills while he worked side by side with his father, and he wanted a smoother transition for his nephew.

"He's been a pretty bright young kid, and he's grown faster by not having me there," Doug McKay said.

At first Korth took over the direction of building maintenance on the family's various properties, then began writing some lease extensions.

But by then the family realized that while their Oakway Center properties were still producing good incomes, they might not always.

For one thing, the medical field was changing, with fewer and fewer doctors buying into or building individual practices as more of them turned to employment with larger health care firms.

For another, malls were changing. National retailers were less comfortable with the anonymity of malls. They wanted their presence felt out on the street, and they wanted nearby parking. They sought environments with complimentary businesses that would bring shoppers and then keep them.

Oakway Center with its hodgepodge didn't fit that bill, McKay Korth said, and the family began an ambitious, multimillion dollar makeover.

Steve Korth took over the liaison work between the family and the architects and contractors.

"They did more than just paint it and restripe the parking lot," Brown said. "They had guts enough to say no more medical space. They've put together a tenant mix and design features in a combination that is now being rewarded."

The family declined to say how much they had invested in the property or what kind of rents they are able to charge now, but Brown said their rents are in line with similar quality space throughout the city.

Widespread holdings

McKay Investment Co., now owns more than a dozen commercial properties in the metro area and has holdings in Medford, Ontario, North Bend and Winston. The company has reached that pivotal third generation in family-owned businesses where more family members are involved, and the potential for disputes and disagreements is greater. The partnership has grown to include McKay Korth's three children and Doug McKay's two. While some partners live outside the area, they return for regular business meetings and stay abreast of the direction the business is heading, Korth said.

To keep the family business stable, McKay reorganized itself as a limited liability company in 2000 and created Oak Leaf Property Management, which separated family ownership from the day-to-day running of the business, McKay Korth said.

"You can be an owner, but you can't necessarily work here just because you're a family member," she said.

The third generation is now raising the fourth generation - which numbers 11 so far - in the shadow of the family business.

Steve Korth's 4-year-old twin sons were on hand for a recent work session filling planters in the Heritage Center, the courtyard area of which will house restaurants when it's completed.

"They weren't exactly helping, not yet," Korth said.

The family's contribution to the community doesn't end with its investments. Family members also are involved in charitable and social service groups.

The McKay Family Foundation offers grants in support of agencies such as Looking Glass, where Linda McKay Korth is board president. Campfire Girls and Boys, the Pearl Buck Center and FOOD for Lane County all have received McKay Foundation grants. The foundation gives about $75,000 a year to community groups, Doug McKay said.

Family members have served on boards and done fund-raising work for such groups as the United Way and the Boy Scouts, Birth to Three, the Red Cross and the Children's Miracle Network.

Call their involvement another kind of investment, said Chamber of Commerce President Steve Hauser. "Companies like the McKay family do well in the community and turn around and do good things for the community. They are here for the long haul," he said.

McKAY INVESTMENT CO.

Address: 2260 Oakmont Way, Eugene

Owners: Doug McKay, Linda McKay Korth, Steve Korth

Years in business: 49 years

Number of employees: 10

Number of family members involved: Seven

- The Register-Guard

CAPTION(S):

Family members who work with McKay Investment's enterprises include (from left) Amy Romero, Steve Korth, Linda McKay Korth, Doug McKay and Kim Williams. BRIAN DAVIES / The Register-Guard